Financial Services and Markets Bill: RPC Opinion (Green-rated)
Regulatory Policy Committee opinion on HMT's Financial Services and Markets Bill
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The Financial Services and Markets Bill proposes introducing a range of measures to maintain and enhance the UK’s position as a global leader in financial services, ensuring the sector continues to deliver for individuals and businesses across the country. The Impact Assessment includes measures that contribute to several objectives:
• Future Regulatory Framework Review – amending current legislation to make it more tailored to the UK.
• An open and global financial hub – policies that will better enable the UK to engage in business internationally.
• A sector at the forefront of technology and innovation – policies that will enable more innovative financial products and services.
• A competitive marketplace promoting the effective use of capital – policies that seek to improve the operational efficiency of financial markets.
• Financial inclusion and levelling up – policies intended to address disparities and distributional issues (in particular those that are geographic).
• Additional Technical Amendments – covering a variety of policies that will make changes necessary to improve the functionality of financial services.
As originally submitted for RPC scrutiny, the IA received a RED rating (not fit for purpose) as insufficient analysis and evidence had been provided to allow the RPC to validate the EANDCB (Equivalent Annual Net Direct Cost to Business) while consideration of the impact on small and micro businesses (SMBs) was inadequate . This was despite having received an Initial Review Notice prior to the red rated opinion. The department has now submitted a revised IA which we have now GREEN rated as it provides a sufficient assessment of the impacts of the primary and secondary legislation and an estimated EANDCB for three of the measures enacted via the bill in line with RPC guidance. The IA also now includes a sufficient small and micro business assessment (SaMBA) across all measures. As a result of the changes made, the EANDCB has fallen from £30.1 million as originally submitted, to £0.4 million, while the SaMBA for each of the measures, sets out whether SMBs will be directly impacted by the measures and if an exemption should apply for certain requirements.
The IA explains that implementation of many of the measures in the Bill require secondary legislation and the RPC expects the Department to submit further IA(s) for EANDCB validation.
The IA and RPC opinion should both be published alongside the proposed legislation when the Bill is laid before Parliament in order to assist parliamentary scrutiny. However, the Department has not yet published the IA despite the Bill being at committee stage in the House of Commons. The RPC has therefore, decided to publish its opinion in the absence of a published IA to assist the remaining parliamentary scrutiny.